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welcome back, everybody. let's get wack to our guest host, howard ward. howard, this is a big day for you, not only because you're a "squawk" guest host, but because you're a grandfather for the first time. congratulations. did you sleep last night? >> yeah, about 1:00 a.m. in the morning. mother and father are doing well. grandparents are doing well. >> grandson, too. >> grandson, foo, most important. >> not named yet? >> yeah, he snuck in there a little bit of ahead of schedule, so the parents are working on the name. >> again, though, your thoughts on the market, you like -- >> constructive. no need to chase it here. the fire sale is over. there are still a few names that are on sale. don't go against the grain. apple is going to earn more money this year than any other company in america.

>> thank you. congratulations again. join us tomorrow. "squawk on the street" begins right now. good wednesday morning. welcome to "squawk on the street." we're live at the new york stock exchange. the morning after the dow's record high, the futures want to power higher on strong jobs data from adp. got green arrows in europe. and in asia overnight as the bullishness continued well after our close in the u.s. yesterday afternoon. our road map this morning asks, what now? do the new highs draw in new buyers? and what should you shop for first? turns out cramer's got a list of names. >> that jobs data from adp suggests friday's jobs number could be a "b." companies are planning on hiring more, they're keeping it quiet. >> ron johnson on a very short leash. is his termination imminent?

meanwhile, two bullish analysts throw in the towel. facebook which killed investor sentiment last summer, a buy here. cramer with provocative opinions, always provocative, right, on the social media giants. first up, what will the markets do for an encore. you saw it on "squawk on the street," the dow hitting new record highs in yesterday's trading session. blue chips rallying to a new all-time closing high, surpassing the previous record set back in october of '07. if the dow rises 33 points after the open, it will set another all-time high. s&p's got a little ways to go. 25 for the close. 30-something for the interday. but little by little, jim, that's the bullish argument. >> what i like is that there are bulls and bears. now, there have been other times in our careers, where there were just strong bulls, and weaker bulls. we've got people coming on and saying, listen, this is going to be one of those moments that's going to be disastrous the moment the fed's done. we have feem who fear every

single fed minute. every single person who comes on "squawk" remotely connected to the fed, every single data point they fear. they say this is the moment it's over. in the meantime, they fear it when it's down. what i love about this business, they never admit it, they just keep talking. what a business. can you imagine if you're a doctor and you keep operating and kill people and say, hey, man, bring them in, we've got some more to kill. it's an amazing business. no rigor whatsoever? think about it. >> i'm amazed by the analogy to doctors killing people in terms of analysts -- >> okay, okay. they have malpractice insurance. i think it's incredible that people who vociferously come on the air and talk about how it has to end. in the interim they've been saying it for 3,000 dow points. >> and your point is felt by real people, real americans, who

sold at the lows. and now are being asked to buy up here. it is a tough sell. >> thank you. and i think what -- i'm being facetious. i just am amazed at the overall sense of when this ends. it's going to end horribly. i think, you know, my favorite paper of record these days, and yours, too, rational ex ur brans, "usa today." as far as i'm concerned, they represent us. they represent the people who are following the market. and i think this is a very plain spoken and to bear market thesis. i like that. >> what really looks good about this rally, and we say it cautiously, but what looks good on a technical basis is a lot of the big stocks out there, johnson & johnson, walmart, disney, these are stocks that have built on a base of about ten years. if we look at the ten-year chart -- >> oh, she was so great last night. >> she pointed out on these

charts that these were really long basis built, the longer the base, the higher in space. love that, right? >> yes. >> but she says essentially these stocks are poised to keep going higher. because they were basing for quite a long time. so it's a solid move higher. >> i always use louise's work when i was a hedge fund manager. i'm not a technician. however, there are enough major people at major firms that we know who look at these charts and say, you know what, they now verify my thinking that disney's a buy. we may think that is hocus-pocus. but at times like this, there's a lot of hocus-pocus -- >> selling to a certain extent. >> thank you. >> which is why you need to keep -- imagine if we had an energy policy, imagine if we had a government that was actually acting and putting an immigration in place, that would help ness coming up with tax reform that perhaps allowed businesses to repatriate some of their cash, imagine that, where would we be then? >> i don't know.

is that -- i find that warren buffett, okay, on becky's show, in the interview, said he's going to use natural gas engines for railroads. all of a sudden the journal breaks the story. >> that was interesting. >> the show of record is -- don't you love the non-attribution to becky's interview? there's an example of what david is talking about. if we actually used natural gas, remember, the railroads are the largest per capita users of diesel. i get what you say. because we could be a power -- >> there's a great opportunity here that could conceivably propel us, the economy at least, i mean, we're still talking about sub-3% gdp growth, without a doubt. >> and then bernanke wouldn't have to do anything. >> but then you're revisiting withdrawing the qe and that kind of thing. there are differences between this high and the high we saw five, six years ago, i guess,

'07. certainly the credit markets are one of them. but there is a bit of concern creeping on the credit market side. not just will rates skyrocket because qe's got to go away. but there are some things -- there's risk being taken, perhaps, that we should keep an eye on, that has now -- it doesn't mean it's going to stain the equity markets in the way that we watched credit overtake everything during the crisis. >> right. >> because we don't have as many securitized products built on securitized products, thankfully. but it is worth watching. there are pick toggles -- i hate to use that word -- the opportunity for a company to pay back in kind, as opposed to pay interest on its debt. >> i thought you meant the old one. >> covenant lights coming back in high yield. there are things we should keep our eye on that side of the ledger. >> that's what bit us. people weren't looking at that. they were looking at the fact that china's gdp growth was big, so you go by the whole of the

mosaic. the leaders last time we were here were largely guano based, fer fertilizer. think about the stocks you just -- big cap stocks people like. they're starting to pay a lot times earnings. we got the 27 times earnings in 1987. >> can you count the buy on a procter & gamble? and johnson & johnson? >> procter had such a run. >> 19 times forward earnings. >> but at the same time, you can talk about really high quality financials that where the book has been scrubbed clean that are selling at a fraction of where they were. the all-time high. >> proclaimed by refinements in their labor force, which leads to the argument, why this doesn't feel real, jim. right? why a lot of people are reading that headline that you mentioned, and saying, then why is my neighbor still looking for work a year after being laid off? >> the dow jones industrial average, 30 companies created

700,000 new jobs in the period -- you do the math on that, you'll see very little growth. that is even -- you'll see a lot of the companies added people by acquisition. so the dow jones 30, i'm trying to boil it down right now, may have been a net buyer during this period. maybe that's how they got to where they are. >> people said, i mean, the market is a reflection on corporate profitability. which is one piece of gdp. it is not the end all, be all. >> when you talk to regular people, i know you do, because you do a lot of stuff -- >> i talk to regular people. >> just normal. not irregular people. >> just regular people, let me qualify. >> i like to go up to people, are you a regular person? >> when you're in the nfl and talk to a non-nfl player -- >> got it. >> do you say, you know, are things better? >> i would say it's tilting that way. >> really?

>> it is a slog. >> they say, listen, why is it high? because i'm not doing that well. >> and maybe, who knows, maybe this adp number today, maybe friday surprises us. ism, the new orders, the macro is building -- >> the housing recovery certainly making people feel better. >> your point is a good one. it's hard to find regular people who are -- >> you're just going to nail me for it. i didn't mean -- >> when i do speak to my wealthy friends, they will not acknowledge they're doing better, but they are. >> wealthy people want to keep people in their paycheck chains. because they've already made the money and you only need to get rich once. talk to me when i worked at goldman sachs. one of the things i'm fixated on is the idea that people don't feel the stock market is a place to make money. it's just a place to risk money. that has not changed. even with these new highs. >> that's a great point. that's a very --

>> a risky place to make money. i went back and looked at a tape of a show that jona in 1997, and you had people taking their -- they're borrowing money to be in the stock market, taking their 401(k) and trying to find ways to get around it, put everything in, giving up their businesses to day trade. you don't see that now. >> good. >> that is good. >> i don't want the fruit guy who sells in the morning and then day trades in the afternoon. i don't want that. maybe you want broader participation, however, in the equity markets. but you may not get it. it does begin to look as though that fear that you're discussing, the risk parameters changing, is generational. >> generational is right. >> in terms of today's playbook, what are you looking for? we could hit another record. what do you do? >> i'm looking at something -- david, get ready, because i'm going to say this -- >> okay. >> i'm looking at the

possibility we may be in for a decent run here. because europe is at a 4 1/2-year high. and they're a pathetic parody of the human mind over there. >> china is increasing fiscal spending by 10% for stimulus. so they're going to spend more. >> we don't want this pumped up, but these really horrible markets where there's real gdp, negative, i don't want to say negative growth, because that's negative yardage, i never understood that term, but you say, hold it, we're better than they are, how do we sell off big? germany and spain and italy are going up. >> people will say the balance sheet of the fed is $3 trillion, and when they start pulling it in, that's all over. >> i'll come back and say bank of america. i don't particularly like the stock of bank of america, but it's at 11, 12. it was at 18 between when we hit the high and then when we fell. i can't make an investment case against bank of america.

i just can't. >> all right. >> i'll use that as an example that the stock is down gigantically. i'm not a big fan of citi, but down 9%. i want to look. >> jcpenney, when it rains, it pours for the retailer. shares set to open a new 52-week lows on a pair of wall street downgrades. citi saying it's much more concerned about how long it will take the company to return to top line growth. meantime, oppenheimer has downgraded penney to a perform from outperform. it seems like there's only one buy rating on the street over at argas. >> we're in a pathetic -- you look at these downgrades, i regard them as pathetic. what are these people thinking? have they been to a penney? i know you get wi-fi at that one in washington. but i do come back, what was he thinking. i keep coming back to, what was

his vision? i'm watching this trial. and i'm thinking, the home goods is their next big turn. what happens if this judge says no? >> ron's out. the pressure's got to be increasing. >> these analysts look foolish. it's hard being an analyst. i get it. and these are not the -- that's why i don't pick on them anymore like i used to. back in the days when they were all just getting paid millions because they were investment bankers, that's one thing. they happened to be capable people, they just had sold out completely. now you don't have people who have sold out completely -- >> partially? >> no, it's- >> they believed, if you can do it, you're going to work at a hedge fund. >> fox believed. you never announce your shorts because they'll shoot against you. remember the flashbacks? they said, these were two famous short sellers, i really loved

them. we're shooting fish in a barrel against the banks. that was the absolute bottom, the banks. these penney downgrades, wish i knew then what i know now. >> the court's correcting strategies about them, will drive meaningful sales improvement. this adds continued pressure. you know, the management reads this, shareholders read this and say, you've lost the last possible analyst. where are we now. maybe it's a turning point for the company. data released, or research note last week from itg, they were measuring right up to the middle of february. they said month-to-date, things looked to be trending down 20% in terms of asps and transaction volume. >> that is a lot. >> the point being, it hasn't turned. we only got the end of the year. this year could be going along just as poorly. >> and brian nagel at

oppenheimer said in his note that a capital raise looks like more of a necessity than a strategic choice. so once you raise that question -- >> and i think the most damning thing of all the notes is the citi note today saying the moves they made were done without testing, without analytics like they were trying to do this by their gut. >> i'm looking at jcp and thinking if first energy, right now they ought to call duncan niederauer, they could turn off jersey central power, jcp. first energy might get there and say we want jcp when they're ready. >> benitor? when we come back, is facebook on its way back to the ipo price? what cramer has to say about that stock next. and bob dudley, after the death yesterday of hugo chavez. what's at stake for the oil

giant. adp continues to give a little buying power. "squawk on the street" live from post 9 at the nyse when we return. shareholders meeting. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away.

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shares of facebook moving higher, up 47% in the last six months. here's cramer's take on the stock from "mad money" last night. >> i'm a long-term bull on facebook. even as i didn't like it out of the chute, after initially struggling with the user base

from desktop to mobile, i think facebook's now mastered mobile. this is because i've done some work with them. i think the company does have a bright future in the mobile environment. i think facebook actually gets cheaper as it goes lower and more expensive as it goes higher. hence why i like the stock right now. i've got to tell you, if these guys, it breaks their floor, goes down there, i'm positive you'll do some buying. >> i remember being on set with you the day before the ipo, and your words were sell, sell, sell on the ipo. that conference really did change your view. >> facebook has become a very good way to reach younger people via mobile. and i don't think people recognize that it's a way to be able to reach younger people. it's a cheaper way than google. it's an actual mechanical -- now, this was a call, two separate technicians came in to me, who i really strutrust, andy

said this is the chart in the book. i am not a chartist. a lot of people, even the guys at fidelity follow this thing. and i just want to say it's become -- it's actually working for advertisers. i think that's important, because a lot of people think that z man, that zuckerberg doesn't know what he's doing. a lot of people think this is a tawdry, this is the worst possible stock in this environment. all i'm saying is, someone who is trying to reach these people, it does work. and you may hate the stock, you may hate the company, but it's a way to reach younger people, if you're an advertiser. >> why have there been stories here and there that engagement is slipping somehow on the margin? people spending less time, demo's changing. >> that's an issue. there are still 1 billion users. i know people can say that maybe they're dating people, and that's wrong. i know that it is not a cheap stock by any means. and you want to be skeptical about what i'm saying here.

because this is a burned and toasted stock. however, it is one of those companies that has transformed itself. and those of us who remember when sergei would be on google and we would be like, what the heck. what are they doing. they're spending like mad. it turned out it worked. be skeptical of this piece is what i'm saying. but understand as someone who's trying to reach out to people in another venue, geez. i don't want to, but it's the way you have to go. >> how do you get your portfolio to yu all-time highs. we'll take one more look at futures before the opening bell in just about, oh, 8 1/2 minutes. how do traders using technical analysis streamline their process?

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time for jim's "mad dash" on a wednesday. you think it's all euphoria? some downgrades today of a qualcomm, for instance. >> jacobs was on. they raised the dividend. here's goldman taking it from conviction to buy. this is the theme. this would have been a stock that would have been 100 in 2000. >> since they added it to the conviction buy, it's up 100% versus s&p 43. >> david was right. we're so skeptical about

analysts. some guys are doing a darn good job. >> you're talking the son of radio. >> i was talking with john. he's the greatest. watching him on the sports show. they've got everybody covered. what we were talking about is there's a big offering today, they love the rating call that we made right here, carl, at $8 and then went up to $10. one of the best performers. they're saying perhaps this is a rating, get in on the deal. this is a mortgage insurer that's a great business now. the old business is rolling off. who am i to say that this won't work again just like radiant. >> a good exchange on the special last night. >> how much fun did we have last night. there was a lot of skepticism. do we just ignore that because we want doing diligent? >> the question today is, can we make it two in a row. opening bell is coming up next. there's this island -- and it's got super-cute kangaroos.

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[ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world. opening bell set to ring in a little more than a minute.

obviously interesting week. that record high. another interesting day is it was four years ago today s&p interday low 666. and we had a long conversation last night, jim, with our bosses and co-workers about those dark days. and that number will bring back memories. >> newspapers showed us that -- the "wall street journal" that day -- >> it's funny, we always think about the fall of 2008 as a particularly worrisome period, which, of course, it was. then we got through it. aig was saved, t.a.r.p. yet we were revisiting seriously fritdenning levels in march. and worries that the banks would be nationalized. lots of things going on. >> it is amazing that four years later, we're on the anniversary of the bull market. and we are, what, 29 points or

so away from the high. >> there is the opening bell. ishares at the top of the screen at the big board this morning. celebrating the ishares funds. and xilinx. interesting news today. the month of february in dollar terms, biggest buyback on record since they started tracking data in 1985. we know with low rates and bernanke, companies have been able to essentially refi like a household would, and buy back -- >> it's authorizations, by the way. not necessarily the follow-through. but they have followed through. that's a key part of the dynamic in this market. we pointed out many times you can actually buy back stock and have it be to cash flow. >> that's why we always hear about what happens when the punch bowl's taken away. despite the sterno, you can

drink it, yet here we are talking about buybacks. if the buybacks are done, isn't there also the possibility of a funnel that is making it so there's not enough stock to buy for some of these big institutions? again, unnatural. not something you want to see. you want to see natural buy. but talk about these companies that are basing -- these companies have bought back so many shares, it's probably hard to get an offering of 2 million shares unless it's jc penney. you can't get an offering of 2 million shares. i don't know if anybody will offer 200 million to caterpillar. >> a new record high on the dow. 14,300. and on the s&p 500, we should remind you all that we're just about 21 points away from the all-time closing high. so that's one we are watching next. >> right. >> and we'll see, we can't do

this every day. because, i mean, this could go on for a while. >> we could. >> everything has had a record high before. it continues to set record highs. a lot of critics write in and say inflation adjusted. it's 15,000 and something. >> let's back up for a second. we could sit here and i could tell you -- i could do a completely bearish show. i was tempted to do that last night. the ten reasons why it's just a gigantic joke. then you keep coming back to a vodafone, verizon. verizon's still making still 20% below where it was in 2007. but i mean, if companies keep bringing up value, how do i short a company that yields 5% that might bring up that you might lose your shirt. >> we'll bring it up with vodafone and verizon. >> as a former hedge fund manager, i would say, you know what, i just want to short the

whole thing. because it's all high. those guys are saying, we're at a new high. which we are at a new high. and i'm going to go against it, because i am smarter than they are. but it's not been a good thing to be really smart, meaning smart being a little facetious. meaning it's not been a really great trade to say it's all bernanke, and if bernanke weren't there we would be dramatically lower. in the interim, the bank takes that money. >> when it comes to banks and buybacks, we are soon to get the comprehensive capital analysis and review. otherwise known as ccar. stress tests. >> right. >> this is the one that measures the ability of banks to return capital and how much they can return. that will be a theme also for many of the financial institutions as we move into this period of stress tests again on the -- i call it the ccar. >> do you think a lot of them will fail?

>> no, i don't. >> i don't either. would you look at a senovis? >> there have been some surprises. citi in the past, remember the refusal to allow them to actually do the dividend. >> cost someone their job. >> yes. that was one reason. >> citi has a major bank. down a great deal. >> individual movers in today's session. microsoft is down by more than 1%. certainly underperforming its peers, as well as the broader markets, getting slapped with a fine, $740 million or so. >> 10% free cash flow yield, microsoft. >> but this is a name that has lagged this bull market run. microsoft has been a laggard. it's been getting hit. exxon mobil is also lagging the markets in today's session. >> best buy, third best performing s&p gainer. and jefferies comes out with seven reasons to buy. target goes to 24. they say it could double if

management -- double from 13, i think, if -- or from 19 if management plays all their cards exactly right. >> they talk about the new management, the initiatives, maybe selling some of the overseas stores. there's kind of a theme here, which is we're not dead yet. best buy is not dead yet. and maybe because it's not dead yet, remember, it is a housing play. remember, they have those -- at the top, you can get an in-home movie theater. and they were building them into the high-end homes. that is a business that amazon cannot do. they cannot build a high-end home theater in your basement with seats, you know, popcorn. this is what people did, david. >> it is what they did. is it what they're still doing? >> no. but i'm saying it's a housing plan. you'll be surprised what gets better when housing gets better. it's a high tide that lifts

boats that -- not a titanic, but boats that are slow moving. >> talking about the titanic, jcp shares bottoming. they're up a bit now from the lows. >> i was wondering where you were going with that. >> still down 2.5%. a bit of a controversy related to this. and the vornado sale. deutsche bank did that deal. we know vornado sold its stock at $16.04 a share. deutsche bank -- $16.04. deutsche bank sold it to its clients at $16.40, capturing 36 cents a share. $3.5 million. those clients who bought stock on the secondary from vornado, the 40% of jcp, their position of jcp, not too happy with the stock now almost $2 lower than that. just a couple of days later. >> every day there's a new low price. >> at least deutsche bank made some money.

>> as long as your iwatch app will go down. >> although it's up today. >> this is amazing, david. they bury people is what you're saying. but if you go in with your eyes open -- >> they took the risk and bought the stock. they managed to get it to $16.40. probably a bunch of clients not too happy. >> jc penney, look, if we want to be skeptical, our parents did shop there. i bought the venetian blinds there. >> and slacks, you bought slacks there. >> i bought trousers. >> or trousers. >> they're very different, slacks and trousers. >> girls don't wear slacks and trousers. >> not as good as i got at kohl's. i picked up my socks and cheap shirts. >> you don't wear garters, do you? tell me that. >> no. but i have more kohl's socks.

>> garters? my dad has -- they're around your knee. >> does panenney have that? >> they're like suspenders for your socks. >> when big lots, you know, i went to my big lots and i saw cheetos all over the cash register. right next to it, of course, is five below. which i love. >> candy. >> it's just great prices. five below is a terrific store. >> i want to point out one big mover in today's session. with the decline seen today, down by 15.5%, drone maker. huge miss on the fiscal third quarter. the guidance was horrible for the year. they cite everything from the macro environment to spending cuts in d.c., because obviously they could be affected by the sequester.

ben is out saying, you know what, there are potential catalysts on the horizon including a huge defense contract which should be awarded soon. a drone surveillance system. if you got some guts out there, step in and buy the shares here. but it is down by 16%. >> yeah, they were really in a -- i had the company on. and they were going to bring one of the drones to englewood cliffs, which is our headquarters. >> they're not always giant -- >> but it is also been a terrible stock. we're starting to get a lot of sequester worries. you saw harris corp downgraded. in melburn, florida. people talk about the numbers being cut because of the sequester and delays in spending. it's important to point out there's a lot of sectors in the market not working. s&p groups are still not back to where they were. there's still skepticism. there's still some values. you know what's funny, i was watching celgene tick up.

it's not an expensive one. in the old days -- but david, when you were at 1998, 1999, i think celgene would have sold t at -- >> now they're high today. >> it's a fraction on the long-term -- if you're looking at the out, celgene is good. look, whole foods doing absolutely nothing today. again, that was a darling. it's not a darling anymore. there are plenty of stocks that seem to be rolling over, or not participating, and i think, again, that's a sign of skepticism that we want to see. >> let's check in with bob pisani on the floor this morning for more what's on another record, bob. >> duncan niederauer is standing behind me. you know the big difference between 1999, remember the dow 10,000? i still got mine. and today, there's no tv trucks

out front of the new york stock exchange. duncan and i were just talking about this. this has been the most muted rally we've seen in a long time. remember back then? there was a sea of tv reporters out there. i mean, a sea of them that were out there. 2007, the same situation. today, i go around, i go outside looking for trucks. there's not a single one. then you have the headlines in the paper, made all the front pages of the papers. this is typical, "new york times," typical headline, dow industrials hit a milestone. some investors wary. most of the tone of those reports were on that angle. some investors are wary. that's the bottom line here. i think people are just very skeptical about the rally overall. we had great momentum this morning over in asia. did you see japan, opened at a 2 1/2-year high. europe opening strong. germany at a five-year high. generally good numbers this morning. the futures popped on the adp employment numbers overall. retail numbers were mixed. big lots up about 5%. american eagle down about 8%. staples down about 3% right now.

i'll tell you what's missing in this rally right now, and that's the volume. we talked about this before. overall volume in 2013, even with some decent days, by my counted, is still below 2012. so far in 2012, it was weaker than 2011 here. the exchanges are on a hunt for new revenue. nasdaq considering creating a private market for trading to compete against second market. private market for people whose shares are not public. this is a desperate hunt for new revenue. losing market share out there. and this is the kind of situation that we're getting in. they can't find new revenues here. they're being helped, these companies, by the options businesses. but there are 11 options exchanges. the volumes, the margins are contracting even in the options business. so these companies are out trying to figure out how to get some kind of alternative revenue. you mentioned aero environment. i thought this was interesting here, this is one of the

companies hurt by the sequester. the sales numbers on then were shocking. they went from 370 million for 2013, to 230 to 250. we're talking a drop of more than $100 million. of course, melissa's right, the hope is these orders will return in 2014. here's one very visible vix so far. this struck me as interesting, the world's really changing. two data points, the u.s. passing saudi arabia as the world's largest producer of oil, and now china has also overtaken the u.s. as the world's biggest importer of oil. how different things are becoming in the world. >> thank you, bob. earlier carl referenced lasso who said i don't care about the volume. you always care about volume. suddenly you don't care. that's why it's so hard right now. let's go to bertha coombs at the nymex. >> yesterday we did see oil track along with equities moving up at the end of the day. this morning, the focus shifts

to the weekly inventory report due out at 10:30 a.m. the numbers we got from the industry last night, api were bearish. particularly when it came to crude, particularly large builds. they reported a 5.6 million barrels. expectation for today is for anywhere of a build of 750,000 barrels of crude to a drawdown of about 500,000 barrels. the expectations for gasoline is that we'll see a drawdown of about 1 million barrels. when it comes to rocket fuel in the morning, for me it's coffee. coffee futures yesterday as equities rallied, the dow went to the new high. were down 4%. cratering on a new outlook that brazil this year will likely produce a record crop. david, the interesting thing is, when the coffee futures go down, it never seems to trickle down to my cinnamon latte in the morning. >> and it probably never will. >> no. >> starbucks and their margins. i want to talk a bit about vodafone in particular given the move the stock has had the last couple of days, after had been a

significant downgraft in those shares for some time. a number of reports about verizon and vodafone, it's been out there for quite some time as a possibility. but certainly we wanted to get into it a bit more if we can. at this point i can tell you, there are no discussions going on between vodafone and verizon about structuring a deal under which verizon would purchase the 45% of verizon wireless that it doesn't already own from vodafone in what would be one of the largest transactions from all time. there were discussions about a potential purchase by verizon of all of vodafone. given the respective market caps and the stock price that you just saw over time, there's the look of course at the ownership position of verizon wireless. it is possible that verizon could actually effectuate the deal in a more efficient way by buying all of vodafone. although that remains unclear. what is clear, and the talks that have been occurring are

simply the ones that have been going on for a very long time, namely by verizon's management, reminding everybody out there, it's happy to buy. it's a willing buyer. it wants to buy. it wants to sit down. let's not forget as well that they're partners and they talk all the time. but nothing seems to be occurring right now with respect to a potential transaction. while verizon has been saying for years that it would be willing to do this, wants to figure out a way to do this, it hasn't had a willing partner in doing that, that being vodafone. they may disagree. but many people say, well, what is vodafone doing? there's a leak a couple of weeks ago they might not want to move into buying european cable companies. what would they do with the enormous proceeds with the buyout by verizon that would accrue to them. could be as much as, who knows, $100 billion we're talking

about. now, there would be some tax ramifications, though many people say it could be done in a fairly tax-efficient manner. jim, all this comes back to vodafone. when you talk to people who have been at verizon and worked with the company for a long period of time, they say, we haven't had a willing partner, because they don't have a strategy. british company run by an italian guy, assets all over the place. they haven't maximized them. the one question, while it is 124, $130 billion market cap, could you start to get an activist component in there. could you say it's time, vodafone for you to sit down, make this happen, we don't care that you don't know what you want to do with the proceeds. get it done, because the stock is extraordinary undervalued, given the value of the underlying asset being verizon wireless. >> this company's valuation should have been going up by the day. so i could see people would be angry. >> but every time it goes down, they seem to be able to surface

rumors and talks that put a spotlight on the value of the 45% position. but they never actually get to the finish line. by the way, from ver esizoveriz perspecti perspective, now is the time to do it. you may not get a better chance. even if it were $100 billion, yes, that's valuing verizon wireless at even well over $200 billion. but we'll sglee big numbers. >> yeah. >> i didn't know what you were going to say. i thought it might be that -- i mean, that's how the perk lags of this thing is incredible. >> verizon wireless keeps pounding on it. maybe perhaps try to get some shareholders in vodafone, to get them to get active. huge company. they could say, hey, management, do something. >> right. still to come, best buy receiving an upgrade from jefferies. why is now the right time to buy the stock. we'll talk again. who's making that call. as we head to break, take a

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dow up 55. let's get to simon and see what's coming up at 10:00. >> in the wake of hugo chavez's death, we'll plug directly into the oil and gas industry, with the ceo of bp, bob deadley will be on the show. we're also going to look at the rally from a retail perspective from td ameritrade and a deep dive into china. back to you. let's get "six in sixty" with jim. six stocks in 60 seconds. >> what tech stocks haven't moved. this hasn't moved. when you go to amazon and it says, people bought this, this is this company. the spin-off saying they're a cheap stock.

>> citi on baudeu. >> not a great stock. >> william blair likes discover. >> rock solid balance sheet company. really trichk. look at this. >> another secondary to talk about. >> this is really income. very fine real estate investment trust company. does retail stores. and it's a bust, opportunity i think. >> and finally, jpmorgan. >> jpmorgan likes xinilnx. it's one of these guys who's soft-spoken, but this is a secular winner and share taker away from altera. >> it looks like he's always operating in first gear but he's in fifth gear. >> they put out t-shirts that he and me were separated at birth. >> the resemblance is lost on me. >> thank you very much for that. no offense, moshe. a live and exclusive interview with bp's bob dudley,

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welcome back to "squawk on the street." i'm steve liesman. we're waiting for factory orders out at 10:00, looking for a con

sen us of minus 2.3. a pretty sharp decline in aircraft spending. the numbers are not quite in yet, as i try to do a tap dance here. like rick santelli does. hold on one second. let me see if i can find them here. i don't have factory orders, guys. i will get back to you in a second. if you have them, please let me know. but i don't have them. let me talk about adp while we wait for those numbers here. adp came in above expectations, around 170,000. you can see they came in at 198, revised up in january. construction, manufacturing combining for 30,000. both of those two critical sectors on the positive side. small business down, but leading the way among businesses. the nonfarm payroll estimates for business and government and the private sector, 160,000. so i'm wondering if maybe some economists are going to be

revising up those forecasts just slightly. let me tell you what the story is. the story is right now we've been losing about 5,000 government jobs a month. but the estimate is that we're going to have a hit to the government sector and some related private sector job growth because of the sequester. and that's going to be something we'll have to follow, anywhere from, i don't know, 50 to 60,000 jobs per month could be lost if some of the sequester pay cuts are -- or spending cuts end up hitting the job market. we're waiting for the factory orders. on the day when i did it, instead of rick, just to kind of get a laugh, i guess. >> murphy's law. they got you good, steve. >> yeah, they did. we're all laughing about it, aren't we. >> it's okay. it's just an international audience of viewers, millions around the world. let's get the road map for the next hour. dow hitting an all-time high for the next session. are new buyers really jumping in? when will the cyclicals start

playing? top strategists on how to play the big bull run. two firms citing growing concern over the retailer's so-called turn-around plan. is it too little too late at this point. jefferies says best buy is a good buy here. we've got the analysts behind that call. an exclusive interview with bp's ceo bob dudley. what does he think is next for the oil markets. a new record here for the dow as we mentioned. records keep coming. importantly in today's session, new high in the transports being confirmed also by the dow. so a buy signal. let's bring in doug ramsey, director of research. art, i will start off with you. a lot of people might have missed this rally. what do you tell them? does it keep going? >> i think it does keep going. if history is proven out here when we make the new highs.

we've done it 14 times before. i think we're in a place now where things are a little different than the last time at this level. if you think about the multiples on the marketplace now as compared to 2007, the last time we visited these levels. we're trading a little less than 14 times on the s&p. 18 1/2 times on the s&p in 2007. we still don't have participation. if you think about the flows since 2007, we've seen about 553 billion come out of equity funds just this year. at a pace greater than bonds. that's only been about 60 billion so far. i think we still have more tailwinds than headwinds. i think there's more room to go here. >> all right. we do have the factory orders numbers out. let's go back to steve liesman at headquarters to get the lowdown. >> so a little bit better than expected on the factory orders. just putting an exclamation

point on the segment we just did. down 2% compared to a forecast of minus 2.3%. a little bit better than expected in january. it's a tough month in general. we tend to see declines in capital spending in the first month of the quarter. something going back since 2008. it's been noticed by the economists. one of the interesting things about the durable goods numbers is we did not see the decline in the durable goods numbers. are businesses feeling robust enough to be spending on capital goods. >> thank you very much, steve. let's pick up the conversation and go out to doug. doug, on the s&p 500, perhaps most importantly for market watchers out there, we're watching for the level 1565.15. you say that's a magnet, that we'll get there. that seasonality will kick in? >> yeah, i think it could. 1565 is so close. i think, you know, why not just go up and do it. the other thing is, a milestone

we're coming up on here is a couple of days away. which is the fourth anniversary of the cyclical bull market. and there have been seven other bull markets that have made it to four years. and interestingly enough, five of those seven have gone on to see another year. so, you know, when you get in these extended phases, they can last for a while. i would say, and i have probably been saying for a while, that we're in the eighth inning of this thing. but hey, i'm a minnesota twins fan. i've seen some really long eighth innings. >> all right. why don't we go ahead, art, back to you, in terms of the inclusiveness of this bull run. we've seen a lot of participation, small caps, new highs, mid caps, new highs. the underperformers in this big run, they're the circumstance lick al areas of the markets.

do you need to see for your own conviction, do you need to see the participation of the growth areas in order for you to be a true believer in this rally? >> that's a good question. i'm concerned about the materials, and part of that has to do with the transition going on in the china demand story. whereas the first sort of ten-year of the 30-year project in china to bring 15 to 20 million people into the cities from the country has transitioned slightly. so the shift in the material demand is going to be a little bit less over the next ten year than it was in the last ten years. but that's okay. te the technology investment is certainly a whole lot different than it was in the last ten years. think about things like fusion io, things in the cloud, versus things that kept you tethered to your desk. i think technology will be the leadership in '13. i wouldn't be as concerned about the fact that the material stocks as a cyclical aren't driving the market here.

and probably at the point that we're at is it's probably the right thing to do. think about china as being one of the largest users of materials, transitioning to a consumer versus to the point to get to where they are -- >> doug, let me ask you. a note out this morning when they recorded in february $117 billion of authorizations for stock buybacks by ceos. nobody's plugged in more to the american economy than the ceos. they're the people who have got to put their organizations on the line for what they see two or three years down the line. that level of share buybacks is twice what it was this time last year. and it is $28 billion more than we had when the markets last peaked. if they are not prepared to put that money to work in the american economy, what do they see looking forward that we may have missed? >> you know, we don't put a lot of credence in the buybacks. the problem is, the buybacks, you know, public buybacks of

equities are sort of like the public reentering. those buybacks tend to take place at prices that are not that economic. i'd just as soon see it come back to us in -- >> doug, that's not the point i'm maging. what i'm saying is these ceos are suggesting this is excess capital, capital they do not want to invest in the economy, $118 billion. why do they not want to invest it? why are they returning it? >> you know, it's just sluggish top line growth around the world. what i'm saying is, i think a better use is to come back to shareholders. >> if there is this sluggish top line growth, if they believe that's going to continue, how can the markets continue to rally? >> well, there's obviously printing presses running around the world. i'm skeptical. i don't like relative valuation arguments, the idea that stocks are cheap relative to bonds. that's true, but stocks are not cheap in an absolute sense.

i mean, if you just run the numbers, and i've heard reference this morning to some pretty low pe ratios. when you smooth out earnings on a cyclical basis, pes are not low. we would say the normalized pe on the s&p is 20 times. that's not too far from where you peaked out stocks on a normalized basis in 2007. >> all right. guys, we're going to leave it there. good to see you, art and doug. big question this morning, do record-breaking dow levels spur the retail investor to jump on the equities train? we bring in todd bradley at td ameritrade. tom, good to have you here. you're the guy we want to talk to, because the question is, do mom and pop play? we're looking at the newspaper coverage this morning. how do you think sentiment changes, if at all? and over what period of time does it take for them to start playing in a significant way? >> first of all, i think the sentiment is definitely high. we have an imx index we released

on monday. it's at one of the all-time highs on our index. >> sentiment, you mean bullishness? >> bullishness, that's correct. quite a bit of bullishness out there for most investors. amongst the professionals as well. we cater to over 4,000 independent i.r.a.s. they're both bullish. >> that's not a bad sign? hasn't that in the past historically been contrarian? >> if you're a trader, we have a lot of traders on the platform, for example, a lot are selling into the rally. and then on the dips they'll buy in the dips. if you're a long-term investor, short term it doesn't matter to you. long-term investors on our platform recognize that if you have not been in the stock market, if you got out of the stock market and went to cash in 2009, you missed out on one of the greatest rallies in the history of financial services. >> back in the heyday, the measure of investor appetite and

investment were margin accounts. these days, i'm just wondering what you're seeing in terms of the usage of margin and how big the cash balances ar, individual investors. >> as far as margin is concerned, our margin balances are relatively flat. there aren't significant margin balances in terms of our entire portfolio. if you look at all of the assets on the td ameritrade platform, about $500 billion in total assets. $8 billion or $9 billion are in margin debits. if you look at cash, however, cash levels are at highs, in excess of 20%. on the retail accounts, professionals have much lower cash values. >> 20% of a portfolio on average is cash. >> on average. that is skewed a little bit from the traders who are in and out of stocks on a daily basis. some of the sidelines. but still, that's a fairly high number. >> coming in and out of stocks or etfs and other products? >> both. both. stocks and etfs. mostly in stocks.

but retail investors use etfs quite a bit as well. >> your job is to sell products, that's what you do, to engage the retail investor. one of the things you see around the country is how always the next generation is ready to revisit things in the past. you see it in the music industry, you see it with fashion, with people making the same mistakes we made in the '80s. can you sell these products to bright young things and reinvigorate the equity culture? can you take us to a new place rather than just the baby boomers? >> a lot of people are asking us that now, have you lost a generation of investors. i think the answer is, in the long term, i think the answer is no, we have not lost a generation. i think there are a lot of young folks who are concerned because all they've seen are some down trends in the market and volatility in the market. look at since 2009, what the market has done. once the young folks become more educated in the market, in the long term they'll see that the trend line points in the right direction. >> do you target them in a different way? >> it points in the right

direction. as long as you're looking at a period that's more than five, ten years out. >> there's a quote in the journal today, they went and got some color around here on this floor about yesterday's action. and they quote someone who actually works for the exchange, not a trader, works on the systems or infrastructure somehow, he said i'm so glad we're close to a record high because i'm almost 60 and i can't wait to sell. is there not an element of investor who maybe they rode this all the way down and back, and now that they're even -- >> they want to hold. >> well, i think what you'll do is have vitds start to reallocate their portfolios. that's the key, that you're properly diversified, that you have the right amount of equity and fixed income and alternatives. it all depends where you are, in terms of, are you young, are you still accumulating wealth, are you still earning money or near retirement. and what we say to folks most often, especially the folks sitting in all cash is, listen, come to us. ask us for some help. or get some professional help from someone. one of the worst things that you can do is sit on the sidelines

and not participate at all. if you put your money under the mattress, you missed out on one of the greatest rallies in history. >> tom, thanks for coming in. >> sure, guys. >> we'll see what mom and pop says over the next few weeks. after a long battle with cancer, hugo chavez has died. michelle caruso-cabrera is here because we are a business and finance station, to look at what it means for the oil industry. michelle? >> oil supply, thank you very much, simon, he was 58 years old yesterday when he died. the reason the markets paid attention to venezuela so much, he presided over a country with some of the largest reserves in the world. let's show you what happened to venezuelan oil production under hugo chavez. the basic message here is it declined. green is consumption, ignore that part for our purposes here. early 2000, 1999, production at 3.2 million barrels per day. as he stayed in control of the country, he began to siphon off lots and lots of cash from the

state-run oil company. he didn't invest as much. production declined to 2.8 million barrels per day. about by some estimates 2.2 million barrels per day. look how much less he kept shipping to the united states. when he took over, venezuela represented almost 18% of u.s. imports to the united states. but he started to, a, lose production as we told you, but also started giving away a lot of oil to other countries, like cuba, and bolivia. they represented only 8% of the imports to the united states. the question on investors' minds and the oil industry in general is this trend going to reverse now that hugo chavez is dead. when someone else takes over, what are they going to do with oil, are they going to invest more. the bond market will tell you that this will change. here's why. here's venezuela's yield on their sovereign debt. this is the interest rate that the country has to pay. as soon as it became clear that hugo chavez was dying, the interest rates in the country started to fall more and more and more, because they believed

in the future, there's going to be more revenue to be able to pay back their debt. a similar pattern with the cds. this is the insurance that you have to buy if you want to buy it, on the country's sovereign bonds in case they don't pay. the price has declined. it's risen in the last couple of days, because certainly the situation now is for sure uncertainty. when you look at the long-term trend, guys, definitely they think that somehow there's going to be more money coming that's going to be able to pay back their debts. simon, back to you. >> okay, michelle, thank you very much. and the networks of nbc are keeping an eye directly on what is happening in caracas, venezuela. that's a live shot. we'll take you there throughout the day on cnbc. on the markets, the dow hitting fresh record highs today as the bull market turns four years old. much more coverage on what is an historic week for wall street ahead. plus, we may be riding the all-time highs, but could the slowdown in china derail the rally for certain parts of the

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welcome back to "squawk on the street." the big question on the street, which tech stocks could help the nasdaq as it is still 37% away from breaking its closing high of 5,048, a level hit 13 years ago. it really depends on how you look at it. growth versus value. let's start with growth. these are a few of the tech companies on the s&p tech index

that are expected to grow at a compounded annual growth rate of 10% or more over the next five years. as you can see, these stocks trade at a premium to the market as investors are willing to pay a higher multiple for projected growth. on the other side we have a list of value tech names, many of which dubbed old school tech. microsoft, dell on that list, all trading at a discount to the s&p 500 and considered relatively cheap. if you're looking for the sweet spot, growth over 10% or more, only three names on the s&p tech index made the cut. electronic arts, fiserv, and qualcomm. melissa, i know a lot of "fast money" traders speak about qualcomm's play. just yesterday the company increasing its dividend. >> that is true, seema. having a tough time today, because goldman sachs took it off the buy list.

seema mody, thank you. one stock in particular, not participating, in the broad rally on the street, that is jc penney. opening at a new 52-week low. citi lowering jc penney to neutral for buy. longtime bull oppenheimer downgraded penney to perform from outperform. we had an analyst from oppenheimer on last week to defend his stance then. take a listen. >> my call on jcpenney is that behind all this noise, and there's a lot of noise out there right now, i think there are actually signs that this turn-around is beginning to work. i think over the longer term, a more profitable, higher return on investment capital, jcpenney will emerge. >> now, today, in his note, he said additional capital raises for jcp is now more a necessity than strategic alternative. interesting change here. analysts have to change their

stance, but he vigorously supported and defended -- >> there were so few positive voices last week. it seems there are virtually none any longer. the cash burn part of what he notes in his -- about cash burn, i think is worth noting. seeing it accelerate in the early part of this year as they try to open more and more of these stores within the store. will they pull down on the revolver? some expect they may have to. >> the citi downgrade is interesting, because they sat with the ceo cfo and coo and decided they couldn't do it as rapidly as the market expected. that personal interaction failed to convince them, and therefore, they downgraded. >> what's weird is the difference between that sound that he gave us days ago, and the words in his report. the near term risks for jcp are severe. the near term risks are severe. that's a long way to travel in a week. >> yeah, exactly.

one lone bull on the street though, holding on to a buy rating. >> who is that? >> argis. $35 price target. 35 would be close to the 52-week high at this point. still ahead -- >> live and exclusive interview with bob dudley. we'll get his thoughts on what the passing of chavez means for the oil markets moving forward. with the dow at record levels, looking for opportunities to make some more money with tom lee, who's been pretty right here. we'll see how the year progresses back in a couple of minutes. revolutionizing an industry can be a tough act to follow, but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business.

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the euro is lower against the u.s. dollar. how to trade the euro's next move. boris, always good to see you. >> hi, melissa. >> what do you expect out of the meeting tomorrow and the press conference afterwards? >> it's hard to say. there could be a potential for surprise tomorrow. the market is starting to pressure, i think, the eurozone or ecb, into possibly cutting rates further. the situation in the eurozone remains in a quagmire. europe is still very much in a

contractionary mode. so draghi has been known to surprise the market. there may be a potential for them cutting the rates down another 25 basis points. the other thing that i think is happening that's interesting right now is there's a tactical change. the dollar no longer is trading as a safe harbor currency. it is starting to trade as a growth currency. the differential between the u.s. and other g-3 is so great now, money is actually flowing back into the u.s. dollar on positive u.s. data. something we haven't seen in years. we see that today as a matter of fact. the euro is going down, pound going down. the only currency up against the dollar is actually the australian dollar, which is also doing relatively well. i think euro is a sell. i want to avoid any kind of anemic bounces that we have here. i want to stay with a true trend. i want to sell it below the 129.50, with a stop around 131. with a target of 127.50. but i think -- yeah?

>> boris, what you're saying is essentially that when you're navigating across, there's a push/pull to this. in this case it's a matter of which is pulling farther. is the u.s. getting weaker because it's no longer a safe haven, or is the pull of the euro lower going to be stronger because of the expectations of a rate cut? that's sort of what we're navigating here. we've seen a big move in the euro last week, more than a percent against the u.s. dollar. you don't think we've seen that move, the anticipation of more easing? >> that's why i want to sell it only when it breaks the support level of 29.50. we definitely have found a little bit of support underneath the 130 level. if we have a change of news, either an ecb rate cut or really strong nfp number on friday, i think that's going to push the euro lower, regardless whether it's the euro component or dollar component. i think that's an interesting trade. >> you've got the two-day meeting of the bank of japan under way.

isn't there a possibility that the yen actually strengthens? >> nobody's expecting it to do anything. i think the potential here could be positive in the sense that if they do say something more aggressive, if they're willing to step up sooner rather than later, that could help the dollar/yen to recover a little bit further. at this point the market is not expecting anything out of the current boj. it could be to the upside, actually. >> boris, good to speak to you. >> thank you. catch "money in motion" at 5:30 every friday. more education about currencies check out currency class at moneyinmotion@cnbc.com. >> he always looks so rested. he's up in the middle of the night -- >> but he's done it -- this is not his first. friday's big jobs numbers look like an opportunity for you to nail your numbers. this month's prize, that mug.

>> i was going to say, the pen. >> right. >> jim cramer. >> autographed by jim, david, simon, melissa, me. you'll have one minute before the friday release at 8:30 eastern time. there are the rules, if you -- >> very important rules. >> this is a very special -- this is not the exact mug. because we have the exact mug locked away. you know, guarded. but this is a post 9 one-year anniversary mug. that's a unique one that we've signed. it's not your generic cnbc mug. no. that's for the birds. this is special. breaking news with bertha at the nymex. it's inventory time, bertha. >> that's right, simon. inventory numbers out on top. we have oil right now slipping below $90 a barrel. bigger than expected build of 3.8 million, that was less than the api number yesterday. that was bigger than what a lot of analysts were looking for. we saw a bigger draw, however,

of 3.83 million barrels of distill dolates. we're seeing a mixed report and mixed reaction. we've got, as i mentioned, crude down below $90. you're seeing the distillates in terms of heating oil moving up a little bit higher. gasoline off more than expected with that smaller than expected drawdown. that gas today is holding in, though. modestly positive on that big snowstorm that is causing so much disruption in the mid-atlantic and headed up to the northeast. back to you. >> still a lot of questions on venezuela. ber that, thank you. the u.s. market rally sends asia higher overnight. what are some of the best plays in china at the moment and what does the china economy mean for stocks here. we'll have more next from hong kong.

martha stewart living, charles kaufman will be on the show. he broke the martha stewart partnership with macy's. we'll get his thoughts on the courtroom battle in manhattan still ahead. zap technology. departure. hertz gold plus rewards also offers ereturn-- our fastest way to return your car. just note your mileage and zap ! you're outta there ! we'll e-mail your receipt in a flash, too. it's just another way you'll be traveling at the speed of hertz.

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estate market has a lot of investors worried. the finance ministry has set itself a gdp target below last year's numbers. are we seeing serious red flags from the world's second largest economy and what could that mean for us here in the states? helen zhu joins us this morning on the news line. helen, heck of a week for china. i don't know if you saw the "60 minutes" piece on some of these ghost towns. you still say we're in a kind of goldilocks atmosphere over there? how do you square those two things? >> yes, it's good to be here. thanks for having me. look, i think that what i was referring to in terms of goldilocks is really that from a cyclical perspective, we felt a lot of investors in china equities were very excited about the cyclical recovery over the past months, about the pmi consecutively improving, about the p.i. linearly rising, et

cetera. people felt confident about the economic recovery. that's a little bit different versus some of the structural concerns people may have over the medium to longer term. i think those structural concerns very much remain in place. and there are still certainly a lot of china bears out there from that regard. >> does the index itself need to pull back here in the near term? >> well, we've actually already seen quite a sharp pullback in the past couple of weeks. so indeed, as i was mentioning, a lot of people have very high expectations regarding the cyclical picture in the near term. certainly some of the government's recent actions have brought some of that expectation back closer to reality. so the key catalyst was that over the last weekend, the council came out with a number of documents showing new nationwide property properties, some of which were in line with expectations, second mortgages, having higher down payments or higher interest rates or extension of purchase

restriction. but some of the content was definitely, you know, a little bit stricter than people's expectations and i think that's why people are a little bit more worried about the near term cyclical outlook. >> helen, when it comes to the cyclical outlook, the markets, i'm thinking specifically the base metal markets, copper for instance, is doubting that notion that there is cyclical strength in the chinese economy. granted, as you pointed out, we have had some pretty good economic data. and then also the people's congress, the government announced a 10% increase in government spending which should lend strength to that. copper at a 200-day moving average. how do you rectify that? >> well, i think if you look at some of the cyclical sectors, they were actually the first sectors to rally. the market obviously bottomed in september of last year in hong kong and in december last year in the a-share market.

in both cases a lot of the commodities, including copper and cement, and so on and so forth, were the bounce that bounced most sharply. people saw investment was picking up. but i think that acceleration stage is probably partially behind it. we will continue to have recovery and growth, but maybe at a milder pace versus before. and so maybe the easiest money has been made in that regard. and people are now a little bit more worried whether we can still accelerate or we're losing a little bit of steam. certainly if the property policies, we don't really know the details yet, because we've only had the nationwide guidelines, and the local governments are yet to announce what they plan to do on an vitd basis. we will probably only find that out in the second half of march or april. if they turn out to be relatively strict, i think people think they'll disappoint. >> helen, to underline the central point that you're making, even when the outgoing premier said they would get 7.5% growth this year, he warned it

would be difficult, they would have to work hard to attain it. melon says today the downside risks are every greater. is that in essence what you're saying? >> i'm saying that the consensus expectation, especially in the hong kong market right now, has been much higher than 7.5% for a while. the fact that the government has announced 7.5% as a baseline, you know, kind of minimum level, i don't think is a positive surprise. it doesn't bring much reassurance to people. i don't think that will be necessarily positive catalyst. i think people are much more worried that consensus will be revised down closer to the 7.5% level that the government talked. >> helen, it's a fascinating story to watch. halfway from around the world. thanks for coming to the phone. >> thanks. >> helen zhu talking to us from china today. why is jefferies upgrading the stock to a buy claiming there are seven very distinctive

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closing an at all-time record high. hit before the financial crisis back in october of '07. the dow has never been higher at any moment than right now, than it is right now. >> there's a lot of hedge fund momentum in this rally today. >> when the stock market gods push the chips out, they also fall back. >> no shortage of opinions where we go from here. best buy catching an upgrade from hold to buy at jefferies today. the firm believes the stock is at an inflection point and management has the ability to cut costs. daniel binder is an analyst at jefferies, and tells us about seven reasons to buy the shares now. what is the most prominent of the seven reasons in your view? >> the number one reason is the change in management. you've got a management team that's got greater expertise and

turn-arounds growing businesses on land and online. >> that's what they said when ron johnson took over jcpenney. what are they able to do at best buy that he's failed to do at jcp? >> well, look, i think best buy has faced numerous challenges, among them has been bad execution, bad product mix, inability to comp. i think this management team right out of the gate showed us in one of the toughest holiday seasons we've ever seen, they can comp positive. they gave up far less margin than anybody expected. that's the first scorecard. i think there's a lot more coming. >> a lot of what you're suggesting here seems contradictory to me. on the one hantd you're talking about cost cuts but improved customer experience, and multi-channel experience. how do you see them actually in layman's terms managing the shop floor? >> well, i think what you're

going to see is initial upfront investment spending on insourcing i.t. right now ak censure manages their i.t. they need to bring that in-house. they need to sort of bolt onto their existing platforms in the online world, where they underpenetrate and underperform. this past quarter, they actually showed relative outperformance online. i think we're in the early innings there. there will be a period here where you have some duplicate costs. the good news is they've identified about $725 million in cost savings. they've gone after about $150 million already. more to come. some percentage of those total costs will be reinvested back in the business. how much remains to be seen. we're conservatively modeling about 70% of that gets reinvested over time. even on that fairly conservative ratio, we're well above the street on earnings for the next two years. and i think if we start to realize that, you start getting nice multiple expansion in this name. >> i still can't get over the

sort of irony that best buy outsources its i.t. i think that's kind of surprising. but getting back to your known terms of the sale of the european and china business, you say best buy could actually get for those businesses what one the equivalent of about 10% to 15% of the market cap. are they actively shopping that right now, and who would pick up those businesses? those are tough markets, particularly china where you have a lot of domestic players, big ones who are really dominating the market. >> yeah, so they have not announced any strategic alternatives for that business. i think that's smart on their part, they don't want to show their hand. but they do not have a good strategic fit for best buy. they don't have acceptable returns. i think while they didn't disclose the specific business economics this past year, profitability declined, and so it's time to shed those assets. in terms of who would buy them, it's a little less clear on china. i think in europe it would be their partner, carpon warehouse.

>> dan, a big call, $24 on the price target, 25% higher than where we are. thank you very much for sharing it with us. daniel binder there from jefferies. today's better than expected adp number, fueling the bull run even higher. what's really fueling the rally and where is that money coming from. plus, what does the passing of hugo chavez really mean for the oil markets in the long term? the ceo of bp, bob dudley, joins us in an exclusive interview when we're back in a couple of minutes. [ male announcer ] the lexus command performance sales event has begun. ♪ featuring the powerful gs. ♪ just when you thought you had experienced performance

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hugo chavez passing away yesterday. what does it mean for the oil markets in the long term in joining us live from houston, texas, sharon epper son joined my bp c eo bob dudley in a cnbc exclusive. sharon? >> a lot of folks here buzzing about the death of hugo chavez and what that means. joining me now is bp ceo bob

dudley. bp exited venezuela several years ago but would it cause bp to reconsider entering the country? >> we sold so in a sense we had an interest and now with the transaction through that we'll still have an interest. venezuela's a largest reserve holder of oil in the world. that's what we believe. it's got a very, very promising future for the next century in oil production, so of course, leadership does matter. and so, i don't believe there will be any sharp shocks and everybody's walking and talking about it here. and we'll just watch it. but of course, as a company, in time, the right conditions, we're an oil company so if the investments are there economic and stable, you would see us there and of course russnet is well established in venezuela. >> you talked about tnkpb and bp has played a major role in russia for a very long time. where do you see the future of

what you're doing in russia and a big deal to hammer out right now. >> that's right. we have had an adventurous and successful joint venture if russia. we sold our interest and making them the largest oil-producing company in the world and we'll own roughly 20% of that as a result of the transaction. to me, it's taken i would say a problem but we have turned it in to an opportunity. we're enthusiastic about the potential and the potential of russia. it's got a lot yet for it to come on shore and offshore, as well. we are pleased about this. >> you are looking particularly in the potential in the future of some of the tight oil, the shale oil plays in russia, as well. >> that's right. there's a lot of tight oil there, shale oil there and a lot to do on the existing oil fields, the big, major oil fields and exploration potential and of course the next decade

and the next decade beyond that, the arctic and just an enormous set of opportunity there is. >> of course, the potential in the u.s. has been tremendous and that's been a lot of talk in this conference, as well. would you say that bp's commitment to the united states and particularly to the gulf of mexico is even greater than it was prior to the deepwater horizon disaster? >> that was a terrible, terrible accident but we do remain absolutely rock solid committed to the united states. our heritage, many of it comes from here in the united states. many people don't realize we have invested $55 billion in the u.s. in the last 5 years. >> that's outside of anything related to the spill? >> that's right. that's right. and so we have had an enormous amount of commitment to the united states. more than any other energy company. in fact, in the u.s. we have 21,000 employees, a quarter of a million jobs really based on the company activities. we have activities from alaska, not only the gulf of mexico, but onshore as well as refining and marketing and the northern tier,

particularly around chicago and ohio. in the utica shale now in ohio so it's -- we're going to be resilient. we have had a very tough time. >> you're still going through a tough time in the legal system. you're still battling the major trial under way in new orleans. what do you see as bp's outcome after the trial? >> well, we've obviously can't say very much about a trial that's under way. we have faith in the justice system. we believe that the investigations have shown multi-party, multi-causal. i don't believe the company is grossly negligent. that's an extremely high bar to show in court and look forward to continuing to tell our story in the courtroom. >> all right. i thank you so much, bob, for being here and enjoying us. appreciate your insights. back to you. >> great stuff. thank you so much for that. our sharon epper son in houston. still ahead, the ceo of zappos weighs in.

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markets rally even higher today after jumping 125 yesterday setting an all-time intraday high an another record today. what's fueling this rally and where's that money coming from? jane wells is on the case. jane? >> reporter: listen, mostly from american workers. i checked the 401(k) for the first time the other day. what a nice surprise. fidelity said increased contributions pushed averages to the highest level ever. up 12% in 2012. though still the average account $77,000. not enough to retire on. for workers over 55, the amount about twice that, 143,000 and while everyone who's done well in the rally is happy, for retail investors burned before, confidence can be a hard thing to regain. >> my 401 and investments are going up. that's great. >> i'm glad it's up. i have some stocks so i'm not worried from that point of view. i hope it will hold. i don't know a good explanation

as to why there's all this enthusiasm. >> i hope that it goes up not too high an turns in to a bubble and then crashes but i'm just saving for the long term. >> i think there's always been this feeling, you know, is this lasting? is it real? are we going to hit a bubble? i'm not really sure that feeling is ever going to leave. i think 2008 was a shell shock for people. >> reporter: she said she's seen the most confidence on the coast. the investment company institute, here's what happened with i.r.a.s and pensions. yes, there are still some. total assets in those accounts topped $9 trillion. bottoming in '09, fallen to 67.8 trillion and rehit the previous peak in the fourth quarter of 2010 and then in 2012 those assets were valued at $10.3 trillion and the market is up since then. back to you. >> that is some wealth

destruction and creation, jane. thanks so much. jane wells in los angeles. you will have a lot to talk about tonight if we close higher or lower. >> a lot of ways to slice the new record and looking at the dash or trash because the sort of trashier stocks huge gainers year to date. netflix. best buy. zynga. we'll talk about them. whether or not they're buys at this stage of the bull market run and barbara marcin giving a best growth ideas in this market because remember dividend plays, defensive plays have been big gainers with high valuations at this point. >> see you later on, guys. if you're just joining us this morning, here's what you missed. ♪ welcome to hour three of "squawk on the street." here's what's happening so far. >> i still have this view that equities are the best place in the financial. >> a couple you love right now? >> yeah, well, we have 90 holdings in our portfolio. almost half the s&p 500 now yield more than bonds.

>> right. >> and they're growing. >> adp saying the total private payroll will rise by 198,000. >> we have people who fear every single fed minute, every single person who comes on "squawk" connected to the fed, they -- every single data point they fear. they say this is the moment it's over. and the meantime they fear 10,000, 11,000, 12,000. a lot of people feel this is a tawdry, this is the worst possible stock in the environment and i'm saying someone who's trying to reach the people, it does work and you may hate the stock, you may hate the company, but it's a way to reach younger people if you're an advertiser. >> and there's the opening bell. >> you get these extended phases, they can last for a while. i would say and i have probably been saying for a while that we're in the eighth inning of this thing but, hey, i'm a minnesota twins fan. i have seen some really long eighth innings.

>> if you have not been in the stock market, if you got out and went to cash in 2009, you missed out on one of the greatest rallies in the history of financial services. good wednesday morning. live here at post nine of the new york stock exchange. let's get a check on the markets as we saw some earlier strength after the record high yesterday. fed largely by a good adp number. dow up almost 30. s&p losing some steam here and still hanging in at 1540. nasdaq in the red down about 3.25. big lots a big gainer after fourth quarter profit rises on strong sales both in the u.s. and canada. company's canadian operations posting the first profitable quarter since the company's purchase back in july of '11 and jcpenney hitting another 52-week

low. downgrade of analysts who hung in there. citi downgrading to neutral taking the target to 15. opi down to perform from outperform. they cut their price target in half from 30 to 15, as well. let's get the road map. records setting more records. is the rally here to stay in tom lee is here to help us navigate the action. plus, domestic diva martha stewart grilled in court on tuesday and find out what it means for her company talking to former chairman charles koppelman who brokered the deal with macy's. ceo of zappos discusses the state of the consumer, we'll find out what he thinks about tell telecommunicating. first, could there be risks to this rally? michelle caruso-cabrera is doing

double duty. covering chavez and this rally. >> a lot of risk overseas but things they highlight. first and foremost, the bears an critics of the rally say it's fed driven and the fundamentals, the quality of the fundamentals are low and some point we're going to wake up to that and the market's going to wake up to that or price for perfection at this point. the other big risk that a lot of people talk about is the situation with the arab spring and some calling the arab winter or the fall and the continuing unsettled situation over there and what would happen with some kind of middle east terrorist event to lead to a large disruption of oil supplies and debilitating. we talked about europe and people complacent about maybe a big banking crisis in europe. the ecb papering over the situation and now more and more growing concern of youth unemployment in europe and destabilizing and that could be the cause of some kind of push

that maybe pushes some of these countries out of the euro. the chinese transition. this comes up over and over again. the chinese government just changed about the same time as the united states. only happens every ten years. and they're trying to organization some massive, massive changes in their economy, within the financial sector and also more urbanization trying to peacefully move hundreds of millions of people from the countryside to the urban areas. how's that going to work? big questions. finally, don't laugh. the sequester. mark zandy this morning said he thinks the economy loses 500,000 jobs because of the sequester. >> going forward, as the sequester is implemented, you know, i would expect more government layoffs and that will show up in the data. one quick caveat, a lot of reduction in -- will be done through furloughs and probably won't show up as a lost job but as a lost hour. a lost hours.

>> of course, that's a lot of lost spending, consumer spending money that the individuals would have had in f they had a job, carl. >> yeah. it's so interesting. we have rick santelli telling it the mao jones index. others calling it fed induced and then a report out that one of the most respected money managers around says being in cash is more dangerous than previously talked about. it's a real forced buying of risk right now in some ways. >> well, absolutely. if we see inflation in some form or fashion and a sharp rise in inflation holding cash, means you are losing money. i mean, i don't think it's any surprise that what the federal reserve would like you to do is to force you in to some of their assets besides hoarding money. are what do you get in a bank account or a treasury? you get almost nothing. that's by design to push you to other places, to buy a house, to buy something that's real. >> michelle, thanks so much for that.

we'll talk to you later. back at hq. in las vegas, what some call the epicenter of the housing crash, housing starts are actually up 96%. how is that possible? might be because there's nothing else to buy. diana o lick with more. >> it's crazy number. las vegas starts up 96% because of an even crazier number, the supply of homes for sale are down 57%. why? well, huge investor demand and improving economy and a new law that brought the banks to a screeching halt. >> the reality is there's not enough inventory out there to meet demand and demand is increasing so the buyers see that and we are getting a lot of interest because of that. >> reporter: so, california-based pardee homes is building frantically. 150% more homes than a year ago, they say. it's customers push to new construction by those all cash

investors who have taken over the existing home market. the bulk of which was distressed. ask chris and candace rogers buying a new home in october using a low down payment va loan and did not sell the old home and still worth less than they paid and no trouble at all finding a renter for it. >> by renting it out, we get an income from it and has a chance to come up and it has a little bit. first year we bought it in 2009 and right -- they were off the table. >> reporter: investor demand for existing homes is good news for the rogers pushing the home prices in las vegas up 13% a year ago. meanwhile, the new foreclosure law pushes 2012 foreclosures down 36%. but the distress is still there. >> nobody really wants to talk about it anymore. >> reporter: but it's still there. the shadow inventory is there. >> i can name a dozen people off the head that have been in their

houses for three years without a payment. >> reporter: and that is the red flag. just one more scary number for you. the vegas realtors tell me there's over 6,000 investor-owned single family homes right now for rent. and that's five times the normal number for that market. carl, a lot of weird numbers in vegas right now. >> that is an amazing number. thanks, diana. talking some housing today. want some more market insight with the new highs. the next guys say it's proof we have been in a secular bull market since '09. what happens now? tom lee, chief equity strategist with jp morgan. good morning. >> good to see you, carl. >> you're directionally target and congratulations on that. >> thank you. >> as i recall, though, you did see paerhaps a mid year sag. >> we have been doing a lot of rethinking because two weeks ago we got cautious. we thought the market was going

to sort of retrace gibb what was happening with credit and the vix but the market's gone straight up and, you know, i think there's a lot of support for stocks in the short term because there's performance anxiety. i think the fact that sequester sort of took place and nothing really happened i think is telling people the market is able to handle shocks but i think for now we're still sticking with the view that stocks are probably not great to put new money to work today. you know? you want to maybe wait for some sort of pullback or consolidation and we still, you know, big picture is we are bullish. a bull market and not only sort of four years ago but continuing for three or four years. >> what do you think is likely to give us the pullback, assuming people will buy it? is it normal seasonality? is it going to be another development in some italian election somewhere? >> it could be either. i think what's supporting stocks is flows. money coming out of em, high

dividend stocks are attracting bond holders but we know that gasoline's been higher. i think some of the global pmis are turning down. we want to make sure there isn't an impact on consumer spending so i think the next weakness could have been a fundamental development or shock as you noted. >> one viewer i like to listen to quite a bit says today feels like trading desks want to take the foot off the gas but portfolio managers worried about cash levels too high. >> that's exactly right. i mean that's been story for four years. this is a bull market everybody said it's because of monetary policy and corporate's really reengineered the balance sheets. record profit margins. we are talking about record s&p earnings and i think a runway for further earnings growth with the upturn in housing and durable goods spending broadly in the u.s. >> to put a period on it, tom,

you like year end 1580? >> yes. >> you would not buy here and you would wait for what? 5%, something more dra mat snik. >> yeah. i think what want to look for a 1400, 1450 level. if i had to put money to work today, you know, what's working still is going to work but what's attractive is probably the laggards. the groups that haven't kept up with the tape and tricky. it's tricky near new highs to put new money to work. >> what a couple of months it's been. come back soon. >> i will. thanks. >> tom lee joining us. want to bring in art for another view. you said the missing piece is an explosion of volume. is the case the same today? >> yeah. we look carefully and see how the market holds up after europe closes. this has a slight hint it may be people offshore playing a little bit of catch up and the rally was very early yesterday. and as i wrote in my comments

today, for all of the theories about what took us to a new high, i really think it was the failure of the dip to be a dip. and i think when the pullback after the italian elections lasts of a shelf life of hours and people saw that dip disappear, they said, oh my gosh, you know, this was going to be my chance to get in at a better level. i can't. and as you alluded to in your conversation with tom, the portfolio manager said, look, i'm underinvested. i don't believe it. it's not quite hold your nose and buy them but this is one of the most reluctant new highs i have seen in a long time. >> mike santoli said it feels like the culmination of a move opposed to a new move. do you think that's true? >> i think that's very well said. a lot of us had the feeling of, you know, they want the new highs. they talk about the new highs.

we all speculate. okay. there you are. you got it. okay? are you happy now? right. >> are you happy now? >> well, happy might be too strong an adjective. i'm appreciative. you always want to do that. again, we want to see how this conversation works out. around the kitchen tables and dining room tables, people have got to be talking about, okay, we were very nervous about the market as maybe we should have been looking at certainly the macro, the big picture but stocks moved up, so march, should we get in or not? we'll know the answer to that discussion in probably two weeks to a month. >> right. you said yesterday that's going to happen over the course of several weeks. art, thanks a lot. >> my pleasure. >> macy's and jcpenney fights out over the martha stewart situation. >> it's terribly important we don't lose a case like this. this is a very important case.

in fact, we really want to make product. our merchandising business is good. >> coming up, the man that brokered the company's deal with macy's, former chairman of martha stewart omnimedia, charles koppelman will join us. with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

take a look at financials here today. s&p trading higher. banks among the best performers

today. >> the markets themselves keep roaring. citi leading the pack, though. the ceo making comments he is not afraid of a more meaningful retruck which you aring. investors sustained big losses of citi itself in the crisis. even after a 1 for 10 reverse stock split. citi down 90% since the last peak. bank of america losing about 77% and wells near flat. only jpmorgan in the green. the entire sector lost about half the value of the interim brought the worst crisis since the great depression. down about 49.7%. prices also brought in a new shareholder. the government. the size of the companies in the sector, though, has only shrunk minimally. 1.8 trillion overall from 2.1 trillion before the crisis. the relative market cap of the big financials might surprise you. cnbc data team crunched figures showing that the big six down

about 18% in market cap. bank of america and citigroup down more than 40% but still much better than shares have performed. only two in the time added market cap. jp morgan and wells fargo and take a look at wells, the market cap grew 52% in the time and compared to a stock that fell 3%. now, ammists see more upside for the banks in the year to come. but carl, it goes without saying that those gains won't come close to making up what investors lost in five year's time. >> no. nowhere near it. key is a good one to watch shopping for these names. >> that's exactly right. martha stewart grilled in court on tuesday. caught between macy's and jcpenney. we'll talk to the man who ran her company while she was in jail nine years ago.

charles ckoppelman is with us after the break. i know what you're thinking...

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martha stewart took the stand in new york state court this week in a contract lawsuit. martha said this morning she does not believe that seling the products at jcp will hinder sales at macy's. let's listen. >> i think our product is so strong at macy's that it will not hurt that at all. we are there for the macy's consumer. we want to be where the consumer needs and wants us. >> charles koppelman served as chairman of martha stewart omnimedia for seven years. she joins us for an exclusive interview this morning. welcome. good to have you. >> good morning. nice to be here. >> walk me through the deal in the beginning and the thinking was because a criticism of the stock over time as you know is too stretched. there's martha stewart at home

depot, petsmart, michael's and other retailers. was macy's meant to anchor all of that? >> no. martha was at kmart. wasn't happy with what was going on there. approached terry. after a projacketed negotiation and made a deal with macy's. i think it's a great deal deal for macy's, it was for martha stewart. but the brand has tremendous strength in so many areas. i mean, if you stop ten people on the street and say martha stewart, they're going to say food. martha's not in the food business yet. can you imagine martha bakes or martha's cupcakes? yeah. anti-aging. you saw martha this morning. she looks beautiful. there's a world of opportunity in the world of anti-aging. >> so you don't think looking at these -- we have it built on the screen. that's not too much? >> not at all. you know, all of those products that martha is involved with,

she has her life all around them. her life is around pets, it's around crafts. i mean, this is what she does. i mean, this is not about putting a name on something. this is about passion and brand equity. cooking as i mentioned. baking. clearly. there's so many areas that this brand can expand to. >> yesterday, talking in the trial, she says of macy's, we got a certain dollar amount and struggled. i never got any further. we couldn't survive without growth. was going to jcp the smart move? >> well, i think the smart move is figuring out how to expand your brand and do in it a thoughtful and profitable way. and if one of the ways to do that is to take category that is are nonexclusive at macy's and put them in other environments, we have had product at walmart and other retailers. that's a good thing to quote martha. and it's a good thing for the brand and i think it perpetuates

the brand. >> in this case, though, some might argue she chose the wrong suitor out of macy's. >> well, you know, hindsight is 20/20. i think when jcpenney talking to martha i think there was a great deal of hope this was going to be an extremely exciting retailer. it still may be. you know? i don't know ron johnson. i know terry. martha, we all know, is smart and knows what she's doing and i think that at the end of the day the brand just continues to get stronger. >> you own a lot of stock i imagine still. >> i do. >> smaller cap name. we don't talk about it as often. what get that is higher? and can she ever have an ammicible divorce with the retailer? kmart was nasty. this is turning out to be nasty. >> kmart wasn't really nasty. it was an orderly transition over a couple of years.

it was a remarkable opportunity to take a brand upstairs which is unheard of before martha did that. again, the power of martha and the brand. and yes, i think everybody could exist or co-exist in a much more friendly manner. can't imagine this is actually in a court. this should be resolved and settled by business men and not by a judge. >> how do you think it's going to turn out in the end? in this courtroom. >> you know, i thought about it a lot obviously. i think however it ends up i think martha is going to win. if it ends up where she has product at macy's and jcpen ne y that's a good thing. the important thing is to expand further with the brand equity it does have. >> given everything that the stock has had thrown at it, and martha herself -- >> sure. >> as i said to you during the break, unsinkable molly brown. >> correct. >> charles, thank you for coming in. >> my pleasure. >> appreciate it. >> not at all.

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the european markets are closing now. >> you heard art kashin saying europe catching up in some ways. >> we have fall anna nicole to the close, carl, as you can see. a lot of red around. what's notable and see that

germany still green. what's happening in europe as obviously professional investors chase performance with the record highs we are getting here in the united states, it's dragging germany and some of those quality chips higher for fear they might lose out on the rally and therefore you have a very big disparity continuing to open up on individual markets around europe. so i showed you yesterday how europe still has to make up about 24% of its losses to come back to the flat line. actually, germany is already there. almost where the dow is as you can see tracking through from the peaks and then to where we are now. but if you look at, for example, spain and italy, they're still well in to negative territory for all the reasons that you might imagine. meantime, something very interesting is happening today. still a lot of nervousness in europe about where we are and there were there was a successful safe haven bond auction of paper in germany today despite the yields are low. you see both the spanish and the -- both the spanish and

german yields falling in to negative territory. there's a generally except for italy ahead of the ecb tomorrow and a lot of talk to cut rates. probably not but perhaps more interesting, they might change the collateral rules then a monetary easing in particular parts of the eurozone most stressed. on the stock front, two big stocks to talk about certainly today in the uk. vodafone and a deal with verizon here in the united states if only over the joint venture of wireless. the market appears to be positioning for activity there. the other one to draw to your attention, the royal bank of scotland where the outgoing governor said that today rbs should be split up in to a good and bad bank and the good bank returned to the private sector. he says it's absolutely ridiculous. it's a nonsense in his view that a bank bailed out by the uk

taxpayer and 82% owned by the taxpayer should be managed at arm's length by the british government. that's a big one to come. back to you. >> thank you. let's get a check on energy and commodities, too. sharon epper son is at -- bertha coombs. >> looking at oil, the inventory numbers, little bit bearish there. coming to crude stockpiles and we are seeing oil below $90 although not a huge pullback. we're also seeing gasoline pulled back, as well. as that drawdown of 600,000 was below the expectations. traders watching the situation in venezuela. the president -- presidential funeral for hugo chavez going on this morning. things appear to be relatively calm. bob dudley saying this morning

in houston if the situation is right and venezuela loosened their rules and regulations, that bp would be interested in going there and certainly a number of energy folks would be interested in going there and ray carbone says ten years ago with the news and the prospect that perhaps to see production turn around in venezuela you would have oil down maybe $4. a big move. however, the context has changed. just looking at the inventory numbers today, we saw a build-in storage. we have nearly 51 million barrels in storage in curbing because of all that production on land here in the u.s. a couple of years ago, back in 2010, when the market was at the height then, we had about 25 million barrels so we are awash in oil here today, carl. so even if things change in venezuela, we're not really as much in need of it as we were. >> all right. bertha, thank you for that. moody's death the death of

venezuelan president will not have an immediate affect on the sovereign rating. moody's downgraded in january and closely watching the political transition there. aaron freedman joins us this morning from moody's. good morning to you. >> thanks. good to be here. >> no immediate affect on their rating but you do say there will be some risks associated with the transition. what's your thinking now that he has passed? >> well, that's correct. we don't see any immediate impact on the rating. we revised venezuela's outlook to negative back in january. we still haven't taken any action on the rating itself. i think that the death really of chavez just confirms what we had been expecting all along which is that venezuela's in the midst of a political transition. events are very fluid there. there's uncertainty as to how things will unfold. we're keeping a close eye on things and we will take rating

action if and when the situation warrants it. >> yeah. still, i mean, it's almost impossible to get a read on what happens next. we got to go through the days of mourning much obviously, looking at pictures of the emotional outbursts in that -- in cara ras today. you say, though, that the possibility is there an opposition candidate could take over and begin to usher in reforms that do improve the credit picture long term. can you characterize your confidence that that's going to happen? >> i think right now that's looking relatively unlikely. clearly a big ground swell of support for chavez and the movement. and i think that nicklas maduro is likely to benefit from that. the fact is while the showing is better than anything that the opposition managed since chavez came to power he was still pretty resoundingly defeated a

few months ago by chavez and then in the regional elections in december, the opposition was defeated again. so it's going to be an uphill battle for them. >> but that was against chavez and of course everyone says maduro despite being in the camp doesn't have the cult of personality. is it fair to expect that capraelis might narrow the margin? >> i don't know if that's fair to expect. i think maduro inherited the mantle now of chavez's official successor and so i think right now it is really tough for the opposition. >> yeah. your point's well taken looking at the streets of care cass. >> thank you for your time. >> thank you. aaron freedman of moody's. bob pisani is here.

cashin said it depends on how we do this afternoon. >> yeah. holding up 4 to 3. modest gains not yet yesterday but the risk-on mode. let's show you. this is what's going on really all week. so here's the risk on stocks. materials, financials and industrials leading the way. more defensive names. utilities and consumer staples names on the downside. i spent the morning taking a look at exchange traded funds and where the money's been flowing and floeping out of year to date to see where the active investors are. interesting results. pretty simple. money in to the big cap u.s. names and out of gold stocks and a few bond stocks here. here's the vanguard s&p 500. inflows at historic high. this is the broad market. anything related to s&p 500 fund seeing inflows. money off the sidelines in to big cap names. that's where people put money. noticeable trade this year.

take a look at emerging market stocks. the eem. this is one of the biggest ones. this is seeing inflows for the year even though it's off of its highs. you can still be putting money in to this even if the index it's based on doesn't come in to the highs. vwi with inflows, as well. here's real estate. notice the risk-on trades where the money's going in. vanguard reit. this is a big one. vnq with inflows. the biggest success of an exchanged traded fund, wisdomtree japan. once they had shinzo abe to win and then reflat the economy and the stock market, boom, it went up. it owns japanese equities and hedges out with the weak end and buying dollars in -- buying yen in strong dollars. if you go to repatriate that money, you lose. if you hedge, that's okay.

attracting several billion dollars in assets. big, big success this year. talk about the losers. when's not hot? seeing outflows of money from several funds. gold trusts. spy spydr and others seeing outflow. not a lot of surprises there and modest outflows in the big bond funds that are out there. so for example, this is the big corporate bond fund. lqd. you want to have corporate funds? this is how you do it. not large ones. there are modest ones. same thing with most of the etfs and treasuries. different maturities. here's the 3 to 7-year ones. iei and seeing modest outflows overall. take a look at what is winning and what's losing here. i'll summarize it simply. in flows in to big emerging market etfs and real estate in the united states.

we are seeing outflows on gold etfs, corporate bonds, treasuries and tips and i would say in terms of the bond outflows, carl, it is modest. but it's noticeable. and so, this is not the great turn. the great rotation. we are not seeing that. but it's -- there is a modest little move out of some of these corporate bonds. this may be a sign of that top. so i'm not willing to say it's rolling over but it's looking a little toppy here in terms of investor interest. >> a key one to watch. bob, thanks. ceo of zappos will join us live and weigh in on the state of the consumer and whether or not to telecommunicate in the companies right after the break. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends,

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♪ coming up, a fund manager not this bull niche a decade. and he'll tell you what he's buying right now. from gm to exxon to microsoft, big name stocks, the rally left behind. are they about to catch up? is the nasdaq's bold new plan for a private stock market good or bad for investors? we'll debate that at the top of the hour. carl, in about 15 moneys. >> scott, see you soon.

online retailer zappos known for free shipping offer and trying to kree quite a social hub in downtown las vegas. joining us from the montgomery tech conference in santa monica, tony hsein of zappos. >> thanks for having me. >> how's it going? >> it's going great. we announced a couple years ago that zappos moving in to the former city hall in downtown las vegas. and we're actually about six months away from completing construction an moving in and so it's actually really changed our whole campus strategy and our ideas of rather than a corporate campus to integrate the city in to the campus move and have as part of the efforts to help revitalize downtown vegas and a reason for doing that is actually every time the city of a city doubles, productivity or

innovation per resident increases. so in order to avoid that fate, we are trying to create an interesting hybrid of corporati corporation, community and city never done before as we know at this scale. >> you have people watching to see how it will do. ground-breaking work there. speaking of like community and work, tony, so much discussion this past week about marissa mayer and yahoo! and telecommunicating and best buy jumping in on that policy. you have been number 11 on the hundred best companies to work for over at "fortune." should people be able to do their job from home? >> well, for us, you know, research has shown that companies with strong cultures outperform those without in the long term financially. we're big, big believers in building strong company cultures and hard to do remotely and so

we actually are -- we don't really telecommunicate at zappos. we want employees to be interacting with each other. building personal relationships and relationships outside of work, as well. what we found is when they have those personal connections that productivity increases with higher levels of trust and employees are willing to do favors for each other, not because they're not just co-workers but friends and communication is better so we're big believers in kind of in-person interactions. >> yeah. i mean, i think that's clearly mayer's point you lose something when you don't have a water cool tore gather around. free shipping, obviously, an element of e-commerce that you helped to pioneer. much easier to find these days. is that any -- does it continue to be a competitive advantage or has that playing field leveled out? >> well, it is not just free shipping but both ways with 365-day return policy and what we are finding is that we

started out with footwear and telling clothing and since we have expanded in to apparel over a few years and customers like to order ten different outfits, try them on in the comfort of the living room and ten different shoes or whatever in different contexts and then send back the ones they don't want or don't like and we encourage that type of behavior and customers tend to order more frequently because they get to try things on and then without any penalty of free returns. >> finally, on the consumer himself or herself, we have seen some pretty -- i wouldn't call it depressed but personal income versus spending. the payroll tax is tough on households. have you seen that show up so far in the quarter? >> i can't speak for the economy overall but for us we have continued to grow year over year

so we haven't noticed that having an impact on us. >> yeah. one last question. we have a couple more seconds here. you have been called in much like andrew mason at groupon for a while sort of a cult-like ceo. just enormous emotional response to your leadership. mason is out with less success than you have had. i wonder if you have thoughts on what he did or didn't do for that company and what he might do next. >> i've met andrew but i don't know that much about the inner workings of that company so can't really comment on that. for us, as zappos, we're much more values driven and ten core values and serve as a formalized definition of our culture and so it's less based upon me as a personality and more based on the values that we actually hire for and we interview for.

>> tony, enjoy santa monica. hard not to. good seeing you again. talk to you soon. >> thanks for having me. >> joining us from zappos. let's get over far quick market flash. >> thank you, carl. fierce competitor to zappos, of course, ebay, seeing weakness down about 3% on the back of comments of analysts saying that february data showing some slowing in growth. still holding estimates at 12.5% growth for the first quarter. no risk to that but saying that growth is going from the high teens to the low teens largely because of weakness in auto parts and baird has a $60 price tar get on the stock trading at 53.60. carl? >> a nice chart for a better part of a year. thank you. disney ceo set to meet shareholders in just about nine minutes. we'll go live to that meeting and get a preview of the fireworks we might expect when "squawk on the street" comes back.

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in less than ten minutes, disney ceo will face shareholders in phoenix, arizona. several resolutions aimed at eiger himself. we have a preview of the meeting.

good morning, julia. >> reporter: good morning to you, carl. with disney shares up more than 30% over the past year, we do expect all of the resolutions proposed by the company to be approved. but there are some proposals submitted by outsiders on the table. proxy advisory firms with california pension fund support a proposal to split the ceo and chairman role and rework the compensation and support a proposal to allow shareholders of more than 3% of the stock for 3 years to appoint board members. sinceiger is ceo, disney returning 138% and doesn't include dividends and the s&p had a total share return of about 25%. in fiscal 2012, he brought home $40 million in total compensation reflecting a 76% gain in disney's stock over that year when the company reported record revenue and profits. his record is so strong even

calster's said it has no plans to sell the stake even if the proposals aren't adopted and glass lewis said the problem is creating a structure for the long term, not iger. >> there's no doubt that they have had a great year, but these are risks and issues that could affect shareholder value in the future and these are issues that investors have an opportunity to correct. >> reporter: the meeting starts in just a couple of minutes and there are about 500 shareholders expected to be inside the theater here behind me and bring you the latest, carl, both on cnbc and of course on cnbc.com. >> interesting to square that criticism with the returns. yule yeah, great story. when we come back, find out how you can become the proud owner of that mug right there. a post-9 one-year anniversary mug. om capital one, bjorn earns unlimited rewards for his small business.

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